Title	Key Dates	Nature of Action	ESG Category	Summary
Texas Permanent School Fund Corporation (Texas PSF) implements proxy voting directives focused on fiduciary responsibility, not political activism	Adopted 4/15/2024	Enforcement / Divestment	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■ Texas PSF has announced that it has implemented an“ESG skeptical” proxy voting matrix, which is offered through Institutional Shareholder Services in response to “widespread criticism” that ISS voting policies supported too many ESG-linked shareholder resolutions. The new Texas PSF proxy voting matrix will take effect immediately and will be used to cast votes on behalf of Texas PSF during the first half of 2024. According to Texas PSF, ISS will produce a report for the Texas PSF to allow for an annual review to ensure that proxy votes comply with the matrix. ■ “The PSF is proud to step up and be a national leader on this issue,” said Tom Maynard, who chairs the Texas PSF board of directors. “We are committed to voting our shares in a manner that reflects Texas values and protects not only the assets under the stewardship of the PSF Corporation but also the mineral, oil and gas assets that create new capital to support Texas students.” Texas Comptroller of Public Accounts Glenn Hegar commended Texas PSF for its move to the “ESG skeptical” proxy voting policy, noting that “Texas is now one of the first states in the nation to have a major public investment vehicle take such action.”
Texas Permanent School Fund (PSF) Corporation Announces Termination of Investment Management Services contracts with BlackRock	Adopted 3/9/2024	Enforcement/Divestment	Target Entities That Boycott Certain Industries	■ The Texas Permanent School Fund Corporation terminated its $8.5 billion contract with BlackRock, accusing the company of boycotting fossil fuel energy producers, which make up a large part of Texas's economy. ■ Companies pushing anti-Texas policies and woke indoctrination have no place in Texas public education, whether in the classroom or as investments in Texas Permanent School Fund” said Tom Maynard, Chair, Texas PSF. “We will continue to defend our Texas values while generating more resources to support the school children of Texas.” This action, which furthers Texas PSF’s systematic divestiture from BlackRock, comes after the corporation adopted a new strategic asset allocation last month, which eliminated the increasingly volatile emerging market debt and equities and reduces exposure to non-U.S. equity areas in which BlackRock was providing investment management services. The impacted contracts represent about $8.5 billion in assets.
Texas AG Blocks Citigroup Participation in Domestic Bond Offerings	Adopted 1/19/2023	Attorney General Position	Target Entities That Boycott Certain Industries	■ After determining that Citigroup had discriminated against the firearms sector, Texas Attorney General Ken Paxton declared that he would not approve any public security issued on or after January 18, 2023, in which Citigroup purchased or underwrote a public security.
Financial Services Firms Subpoenaed by Texas Senate Panel Over ESG Issues	Adopted and in effect 11/22/2022	Enforcement / Divestment	Target Entities That Boycott Certain Industries	■ The Texas Senate Committee on State Affairs subpoenaed BlackRock, Vanguard, State Street and ISS to interrogate their position on ESG policies. The Committee also requested documents to evaluate how the financial services firms’ practices affect the state’s public pensions. ■ At the hearing, a BlackRock Senior Managing Director stated that BlackRock has maintained its independence from groups like the Net Zero Asset Managers initiative: “[BlackRock has] one bias, and that’s to get the best risk-adjusted returns for our clients.” The global chief investment officer for State Street Global Advisors testified that “[State Street is] not telling companies what to do, just informing them of potential climate related risks.”
Teacher Retirement System Adopts Formal ESG Policy	Adopted 9/16/2021	IPS Revisions	Promote ESG Factors in Investment and/or Proxy Voting Decisions	■ Applies to the Teacher Retirement System of Texas. ■ Directs the Investment Division to consider ESG factors that are material to long-term returns and levels of risk (Investment Policy Statement §1.5).
SB13: Relating to State Contracts with and Investments in Certain Companies that Boycott Energy Companies	Effective date 9/1/2021 Adopted 6/14/2021 Introduced 3/11/2021	Legislation	Target Entities That Boycott Certain Industries	INVESTMENT/DIVESTMENT ■ Applies to the Employees Retirement System of Texas, the Teacher Retirement System of Texas, the Texas Municipal Retirement System, the Texas County and District Retirement System, the Texas Emergency Services Retirement System and the permanent school fund. ■ Requires the Comptroller to maintain a list of financial companies that boycott energy companies. ■ Prohibits investment in listed companies. Requires divestment within 360 days from listed companies that do not cease their boycott within 90 days of receiving notice of the state entity's intention to divest. ■ Does not apply to indirect holdings in actively or passively managed investment funds or private equity funds, but requires the state entity to request that the fund managers remove listed companies from the funds or create similar funds without holdings in these companies. CONTRACTS ■ Prohibits state governmental entities from entering into a contract with a company for goods or services worth at least $100,000 and paid at least partly from public funds unless the company verifies in writing that it does not boycott energy companies and will not do so during the contract term. Only applies to companies with at least 10 full-time employees. SUBSEQUENT DEVELOPMENTS Divestment Statute Lists including: Financial Companies that Boycott Energy Companies — Updated October 2023 List of Financial Companies that Boycott Energy Companies FAQ — Updated October 2023 On October 17, 2023, Attorney General Ken Paxton Issues Enforcement Guidance For State Laws Prohibiting Public Contracts with Companies Unlawfully Maintaining "ESG" Policies. The letter advises that it is the responsibility of all governmental entities to exercise due diligence to uphold both the letter and spirit of state law, including exercising their own due diligence and monitoring compliance with relevant government code chapters upon contract formation and any renewal or extension of the contract’s term.
SB19: Relating to Prohibited Contracts with Companies that Discriminate Against the Firearm or Ammunition Industries	Effective date 9/1/2021 Adopted 6/14/2021 Introduced 3/3/2021	Legislation	Target Entities That Boycott Certain Industries	■ Prohibits state governmental entities from entering into a contract with a company for the purchase of goods or services worth at least $100,000 and paid at least partly from public funds unless the company verifies in writing that it does not boycott firearm entities or firearm trade associations and will not do so during the contract term. Only applies to companies with at least 10 full-time employees. SUBSEQUENT DEVELOPMENTS HB1092, which was introduced on 3/2/2023 and which failed to pass, would have repealed SB19 and its prohibitions on state governmental entities from entering into certain contracts with companies that do not verify that they do not and will not boycott firearm entities. On October 17, 2023, Attorney General Ken Paxton Issues Enforcement Guidance For State Laws Prohibiting Public Contracts with Companies Unlawfully Maintaining "ESG" Policies. The letter advises that it is the responsibility of all governmental entities to exercise due diligence to uphold both the letter and spirit of state law, including exercising their own due diligence and monitoring compliance with relevant government code chapters upon contract formation and any renewal or extension of the contract’s term.

HB5245: Prohibiting discrimination by financial institutions against the firearms industry	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Prohibits financial institutions from discriminating against lawful firearms and ammunition industry companies or businesses based solely upon such a company’s or business’s engagement in the constitutionally protected commerce subject matter of firearms or ammunition.
HB5252: Prohibiting discrimination by financial institutions against the oil and gas industry	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Prohibits financial institutions from discriminating against lawful oil and gas industry companies or businesses based solely upon such a company’s or business’s engagement in the constitutionally protected commerce subject matter of oil and gas.
SB2149: Relating to boycott, coercion, and intimidation activities by insurance companies regarding environmental, social, and governance matters	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Prohibits boycott, coercion, and intimidation activities by insurance companies against companies based on ESG criteria, including companies that engage in the fossil-fuel industry, engage in the firearms industry, or do not meet greenhouse gas environmental standards.
SB2146: Relating to oversight by the comptroller of financial institution divestments from certain industries	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Requires financial institutions that operate mutual funds to periodically submit a statement to the comptroller stating whether the financial institution has divested or intends to divest from the mutual fund investments in a company that engages in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy.
HB3399: Relating to governmental contracts with companies that engage in certain economic boycotts	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Prohibits boycott, coercion, and intimidation activities by insurance companies against companies based on ESG criteria, including companies that engage in the fossil-fuel, timber, mining, or agriculture industries and do not commit or pledge to meet environmental standards beyond applicable federal and state law.
SB1446: Relating to the Fiduciary Responsibility of the Governing Body of the Public Retirement Systems in this State and the Investment Agents Acting on Behalf of Those Systems	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Requires the governing body of the public retirement system or an investment agent to “take into account only financial factors” when discharging its fiduciary duties and prohibits such persons from taking any action or considering any factor for the purpose of furthering “social, political, or ideological interests." ■Requires that all shares held directly or indirectly on behalf of the public retirement system be voted“ solely based on financial factors.” An investment agent may only be granted proxy voting authority if it follows a proxy voting policy published by the state or a benchmark proxy voting policy, the “sole goal” of which is to maximize financial return. Prohibits contracting with an investment manager or a proxy advisor relating to investing the system ’s assets or voting, or advising on voting, shares held by the system, unless the contract contains a requirement that the manager or advisor (1) take only financial factors into account, and (2) not take investment or voting action with the purpose of furthering ESG policies. ■Investment agents must have a demonstrated practice of following, and commit in writing to follow, guidelines that align with the duties under the statute.
SB1060: Relating to the adoption of political shareholder proposals by insurers and insurer holding companies	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Prohibits insurers or holding companies from including political shareholder proposals in proxy statements. "Political shareholder proposal" includes proposals that prohibit or limit an insurer's ability to insure an entity involved in legal activity for the purpose of achieving ESG ends.
HB2068: Relating to the fiduciary responsibility of governmental entities and the investment agents, plan administrators, or qualified vendors acting on behalf of those entities	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Prohibits the governing body of a Texas public retirement system or an investment agent from considering any factors (including when determining whether a factor is a material factor) with a purpose of furthering an ESG or similar goal. Requires a fiduciary of a state plan to consider only pecuniary factors when evaluating an investment or discharging duties with respect to a plan. A fiduciary may consider an ESG-related factor under limited circumstances. ■Requires the shares held directly or indirectly by a state plan to be voted only in the pecuniary interest of the plan, and not for the purpose of furthering an ESG or similar goal.
HCR38: Urging the United States Congress to investigate the anti-fiduciary practices of BlackRock CEO Larry Fink	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Resolution urging U.S. Congress to investigate the alleged “anti-fiduciary practices” of the CEO of a major asset manager related to the asset manager’s ESG practices.
SB242: Relating to the identification of and prohibited cooperation by state and local entities with certain federal acts that violate the United States Constitution	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Requires the attorney general to deliver a monthly report identifying each rule adopted by a federal government agency during the previous month that relates to, among other things, the regulation of the financial sector as it relates to ESG standards.
HB982: Relating to a prohibition on contracts with certain companies that use certain ESG criteria	Introduced, but did not pass in the 2023 legislative session	Legislation	Target Entities That Boycott Certain Industries	■Prohibits governmental entities from entering into contracts with a company for goods or services unless the contract contains a written verification from the company that it does not, and will not during the term of the contract, use prohibited ESG criteria to evaluate a business decision or investment strategy. "Prohibited ESG criteria" means environmental, social, and governance criteria that further political policies at the expense of the Texas economy and company shareholders.
HB645: Relating to prohibiting financial institutions and other businesses from using value-based criteria	Introduced, but did not pass in the 2023 legislative session	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Prohibits a financial institution or business from discriminating against a person based on, among other things, any social credit, ESG, or similar value-based standards.

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Past/Inactive Legislation

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